PPF is completely tax-free — contributions (80C), interest, and maturity. SIP gains after 1 year are taxed at 10% LTCG above ₹1L. For tax efficiency, max out your PPF first if you're in the 30% bracket.
Worked examples
Amit, 30, ₹10,000/month for 15 years
Amit puts ₹10,000/month into PPF at 7.1%. After 15 years, he gets roughly ₹32L on ₹18L invested — completely tax-free. His colleague Raju puts the same ₹10,000 into SIP at 12% p.a. and gets ₹50L, but pays ~₹3.2L in LTCG tax on the gain. Post-tax: Raju has ₹46.8L vs Amit's ₹32L. Raju wins, but took market risk; Amit got certainty.
Frequently asked questions
Which is better for 80C savings — ELSS or PPF?
ELSS has a 3-year lock-in vs PPF's 15 years. ELSS returns are higher historically but market-linked. PPF is safer with guaranteed, tax-free returns.
Can I invest in both SIP and PPF simultaneously?
Yes, and most financial planners recommend it. PPF gives tax-free guaranteed income; SIP gives higher growth potential.
Is PPF better for senior citizens?
PPF is not available to senior citizens to open fresh, but existing accounts can be extended. Debt mutual funds or FD ladder may be more suitable post-retirement.